true business intelligence (software concept)
TRANSCRIPT
Dmitry Gudkov, 2009
Content
Qualitative Root-Cause Analysis
Decision-based Performance Management
“True BI” features and benefits
Dmitry Gudkov, 2009
Information is lacking formalized interpretation today
Data
Information
Meaning
Database holds transactional records(atomic information, no business logic)
Traditional BI provides quantitative indicators that are calculated according to business logic. However they still need interpretation
Interpretation and association
Arithmetical business logic
Business meaning of information. Structured and formalized qualitative explanation assigned to quantitative information by human.
R = (100;150)
R grew up by 50%
What does this growth mean? What decisions and factors made R growing?
Example:
Dmitry Gudkov, 2009
Traditional BI lacks interpretation
44%
46%
48%
50%
52%
54%
56%
58%
60%
62%
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
COGS%
0
20
40
60
80
100
120
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
Revenue
What can you learn from these traditional BI charts?
1) COGS% is growing
2) Revenue is falling
Can you answer – Why? What does it mean for business? Are
those trends connected?
Dmitry Gudkov, 2009
True Business Intelligence report
Extremelyhot summer
High harvest losses
Decreased import tax
High purchasingprices
Competition from imported goods
44%
46%
48%
50%
52%
54%
56%
58%
60%
62%
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
COGS%
0
20
40
60
80
100
120
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
Revenue
How about this?
High purchasing
prices
Competition from imported
goods
outcome
Growth of COGS%
Revenueslowdown
Target Net Profitwill not be reached
Dmitry Gudkov, 2009
Traditional BI is only a half-step towards business insight
Traditional BI lacks context and explanation
No obvious answer to “why?”
No really single version of truth – numbers and trends still need interpretation that may vary from person to person
Reports are stored in BI repositories, but their business interpretation is usually not
Access to business interpretation is limited
No use of qualitative information from outer sources
Dmitry Gudkov, 2009
Influencing factors
Factors can be of several types– Manageable– Semi-manageable– Non-manageable
Factors can influence other factors– Primary factors– Consecutive factors
Factors have to be identified by a human
Every factor should have time scope or calendar of applicability
Factor1
Factor2
FactorN
Dmitry Gudkov, 2009
Outcomes
Interpretation from point of view of corporate goals
Must be identified by human
Can be of several types– Predicted– Desired– Actual
Can be influenced by factors, decisions and initiatives
Outcomes should have time scope as well
outcome
Target Net Profitwill not be reached
Dmitry Gudkov, 2009
Single enterprise root-cause model
Built by in-house business analysts
Explorable by every user
Common context for decision-making
Really single version of truth
Has different look depending on chosen time scope
Integrated with traditional BI & PM
Factor
Factor
Factor
Factor
Factor
Factor
Factor
Factor
Outcome
Outcome
Outcome
Dmitry Gudkov, 2009
Content
Qualitative Root-Cause Analysis
Decision-based Performance Management
“True BI” features and benefits
Dmitry Gudkov, 2009
Decisions make businesses live or die
HOWEVER …
When decision is made, often its reasons stay in somebody's mind only
There is no tools to audit reasons of a decision
There is no formalized way to associate reasons and influencing factors that led to a business decision
There is no way to examine what decisions have to be reviewed if a factor has gone or changed
There is no tool to track quantitative results of decisions
Dmitry Gudkov, 2009
Structure of a decision-making
FactorA
FactorB
FactorC
Predicted outcome
Desired outcome
Decision
Initiative
Outcome
gap
Dmitry Gudkov, 2009
Initiatives
One decision can lead to several initiatives
One initiative can have several outcomes
An initiative may become an influencing factor in turn
Factor1
Initiative
FactorN
Dmitry Gudkov, 2009
Decisions
Decision must be associated by human with one or more factors which are reason for the decision
Decision must be associated by human with outcome (possibly through initiative)
Decision should keep information about decision-maker
Factors, predicted outcomes and desired outcome are input for a decision
Actual outcome is output of a decision
Decisions and initiatives can be elements of the single enterprise root-cause model
Dmitry Gudkov, 2009
Time scope and validity calendar
Factors, outcomes, decisions and initiatives should have validity calendar
Validity calendar defines time period when factor (or outcome or decision or initiative) is valid
– E.g. “eternity-to-date”, “date-to-eternity”, “date-to-date”, repeatable calendar, customized calendar
Single root-cause model should be explored within chosen time scope
Single root-cause model may look differently depending on chosen time scope
– Elements of model that are not valid in the chosen time scope do not appear in the model view
Dmitry Gudkov, 2009
Content
Qualitative Root-Cause Analysis
Decision-based Performance Management
“True BI” features and benefits
Dmitry Gudkov, 2009
Linkage to traditional BI & PM tools
Factors may have associated BI reports as a justification (and may have not, surely)
BI reports may be associated with factors and outcomes
Predicted or actual outcome may have associated BI reports as a proof
Desired outcome may have planning model as a justification
Factors and outcomes can be used for building strategy maps
“True BI” tools may utilize common business glossary and integrate to metadata model
Dmitry Gudkov, 2009
Features of “True BI”
Meaningful interpretation of BI information– Really single version of truth
Collaborative qualitative knowledgeRoot-cause analysis of factors, decisions and outcomes in any direction– always possible to answer why– impact analysis
Decision-based Performance ManagementAccumulated experience of decisions– share best practice– smooth transition from person to person
Searchable and taggable factors, outcomes, decisions and initiatives
Dmitry Gudkov, 2009
Benefits of “True BI”
Common decision-making environment
Obviously provides business meaning of BI information to business users, so they don’t have to guess “what does this mean?”
Increases business manageability and insight
Improves quality of decisions as they become more rational
Provides accountability and auditability of management decisions
Directly links decisions of a person with business outcomes
Reduces dependence from a “human factor”
Dmitry Gudkov, 2009
Decisions & Initiatives repository
Factors & Outcomes engine
Product suggestion
that can be extended with
• Factors & Outcomes administration
• Root-cause dependencies modeling
• Linkage to traditional BI
• Decisions & Initiatives repository
• Linkage to Factors & Outcomes
• Linkage to traditional BI & PM
Dmitry Gudkov, 2009
New BI system architecture
Decisions & Initiatives repository
Factors & Outcomes engine
BI tools CPM tools
Source systems Data
Information
Action
Interpretation
Dmitry Gudkov, 2009
Final notes
“True BI” is a new performance management methodology that reflects natural root-cause analysis used for decision-making
“True BI” gives benefits that are not achievable with traditional methodology & tools
“True BI” is very collaborative approach that formalize and syncronize subjective judgements of trusted individuals
Single root-cause model is a cornerstone of “True BI”
Two more abstraction layers should be added into BI & PM software stack to enable “True BI” tooling